Fraud Risk Assessment and the Elements of an Effective Fraud Prevention Plan

Fraud Risk Assessment.
Student’s Name:
Institutional Affiliation:
Course:
Instructor:
Date:
Fraud Risk Assessment.
Every organization needs a fraud risk assessment tool to determine the threats to its functionality. Procedures and controls for mitigation are arrived at after identifying the risks. Risk assessments deal with issues such as misappropriation and illegal acts. Management and stakeholders should come up with fraud control measures for the mitigation process. This paper aims to outline the elements of a fraud prevention plan and give recommendations on how these elements are sufficient for fraud prevention.
B.M. Madyson Plastics, Inc., is not exempted from having a fraud risk assessment tool. Such a company could also lose its annual revenue to high-profile fraud. Mazumdar (2020) posits that relevant regulatory requirements need to be identified to address such risks. The organization should identify specific fraud risks that harm its financial and brand strength. Companies need to review their plan whenever changes ensue in the internal and external environments (Mazumdar, 2020). Identifying the risk, measuring the significance of the risks, and responding to the risk are methods of assessing fraud risks (Mazumdar, 2020). Management is in a better position of realizing opportunities and pressures that amount to fraud after it has collected information on fraud risk from various sources in the company.
From the study of Sow et al. (2018), fraud indicators in organizations are monitored using both automated and manual techniques. Surveys, open discussions, and workshops should be part of the process of monitoring existing fraud risks in organizations. A fraud prevention plan is essential for the protection of employees, the company’s assets, and the reputation of managers. Identify vulnerabilities such as finances that might escalate to weightier illegal acts. Sow et al., (2018) mentioned techniques such as establishing common fraud scenarios, documenting the analysis, interviewing management, conducting surveys, and organizing workshops for brainstorming. They should be used to identify and group fraud risks.
Lowers and Associates (2014) posit that conducting background screening on potential employees is another element of a fraud prevention plan. Managers should be able to identify those individuals who are most likely to commit fraud. Management has a better chance of preventing fraud by screening employees. Fraud employees should be excluded to avoid corrupting the nature of others. Anti-fraud training is a vital element in the prevention of fraud (Lowers & Associates, 2014). An organization’s policies should be emphasized in such training where all staff and managers should be present. Managers should eliminate individuals who fail to adhere to these policies.
Incentive-based payment systems push people to commit fraud. In such a case,...